Reimagining Offline Payments: From Mondex to Paycode
- Gabe Ruhan
- Oct 31
- 5 min read
As central banks explore the future of money, one question looms large: how can digital payments work offline? For billions of people who live or work in areas with little or no connectivity, online-only systems like instant payment schemes or mobile banking apps are simply out of reach. Yet true financial inclusion - and the long-term success of central bank digital currencies (CBDCs) - depends on solving precisely this challenge.
A recent paper from Giesecke+Devrient (G+D), A Money View of Offline Payment Functionality by Lars Hupel (October 2025), revisits this problem through the lens of monetary theory. It dissects three possible models for offline-capable payment systems - each offering a different balance of trust, risk, and practicality - and concludes with a fascinating reminder: we’ve been here before.
Nearly three decades ago, Mondex pioneered a digital cash system that operated fully offline. It was far ahead of its time. Today, as we grapple with the design of offline CBDCs and interoperable payment infrastructures, Mondex’s core principles are making a comeback - this time powered by biometric security, blockchain auditability, and smart contract controls.
At Paycode, we see these ideas converging in practice. Our offline biometric payment platform embodies many of the same mechanics as Mondex, but with the resilience, compliance, and traceability required in today’s digital economy.
Why Offline Still Matters
Most existing payment systems assume constant connectivity. Fast payment networks like India’s UPI or Brazil’s Pix work brilliantly - if both payer and payee are online. But in much of the developing world, connectivity is unreliable, power is intermittent, and merchants operate in remote locations.
Offline capability isn’t just a technical feature; it’s an inclusion imperative. As the G+D paper puts it, a well-designed offline system should allow “individuals and merchants to conduct transactions without online connectivity,” while maintaining the integrity of balances and liabilities within the broader financial system.
The analogy is cash: a bearer instrument that functions without intermediaries or networks. Offline CBDC or private-money equivalents should replicate that same simplicity - yet remain auditable and compliant when reconnected.
The Three Models for Offline Payments
Hupel outlines three issuance models for offline digital payments:
Classic CBDC (Central Bank as Issuer) - The central bank mints the digital currency, distributes it through commercial banks, and assumes full liability. This mirrors how cash circulates today. The challenge: most central banks are reluctant to take on retail distribution or the operational complexity of 24/7 minting and redemption.
Multi-Issuer Model (Commercial Banks Issue Tokens) - Each bank issues its own offline tokens, backed by deposits. When users transact across banks, they essentially swap liabilities between institutions. Without real-time settlement, this introduces credit and interoperability risks - banks may not want to “hold” another bank’s promises.
Single-Issuer Model (One Trusted Intermediary) - A neutral entity such as a national payment switch, automated clearing house, or instant payment operator, acts as the single issuer. Commercial banks prefund a fiduciary account at the central bank, and the operator issues offline tokens backed by reserves. Users and merchants can transact freely, and when connectivity resumes, settlements are reconciled automatically.
The G+D paper argues convincingly for this single-issuer model. It balances risk, efficiency, and inclusion much as systems like CHIPS in the US or EURO1 in Europe manage liquidity across multiple banks.
Mondex: The Original Offline Digital Cash System
The paper then turns to a historical case study: Mondex, launched in the mid-1990s in the UK and Canada.
Mondex was a smart-card based electronic purse. Users could load funds onto their card at a bank branch and then spend them directly with merchants - no internet, no network, no third party. Transactions were cryptographically signed and settled instantly between cards, offline.
Technically, Mondex functioned through a single-issuer model. Participating banks formed a joint venture (the “originator”) that minted the electronic value. The originator held safe, marketable assets, similar to a stablecoin reserve, and issued Mondex value to banks, who distributed it to customers. The result was effectively digital cash backed by real assets, accepted by any participating institution.
As Hupel notes, Mondex blurred the lines between a stablecoin and a CBDC. It behaved like cash, yet was privately issued under central bank oversight. In principle, if the system had reached national scale, it could easily have been absorbed by the central bank as public money.
The Paycode Evolution
Fast forward to today. Paycode’s biometric offline payment system builds on the same foundations as Mondex but adapted to modern regulatory, technological, and humanitarian contexts.
Like Mondex, Paycode creates a value system where funds can move securely offline. But several critical innovations make it fit for purpose in the 2020s:
Biometric Proof of Life - Every transaction is authenticated through fingerprint or facial biometrics, ensuring the rightful holder authorizes each payment—even in the absence of connectivity.
Secure Offline Ledger - Paycode devices (POS terminals and cards) store and validate transactions offline, maintaining a tamper-proof audit trail that syncs automatically when connectivity returns.
Multi-Wallet Functionality - Each card can hold multiple value stores: fiat, stablecoins, or CBDC equivalents allowing interoperability with national payment systems, donor funds, or social grants.
Programmable Settlement - Once reconnected, Paycode’s system executes conditional smart contracts for settlement: releasing funds only upon biometric verification of delivery.
Local Liquidity and Governance - Unlike Mondex, Paycode integrates with local banking partners, mobile money operators, and (potentially) central bank nodes. Liquidity can be prefunded by commercial banks, similar to the single-issuer IPS model described by G+D.
In effect, Paycode has built a modern, biometric version of Mondex - anchored in financial inclusion and real-world resilience.
Beyond Financial Inclusion: A System for Every Economy
For the past decade, Paycode’s mission has been clear: to solve the last-mile challenges of financial inclusion across Africa and Asia. Our offline technology has enabled millions of people in remote communities to access digital finance, social grants, and government payments even where there is no signal, no power, and no bank branch in sight.
But as digital systems become ever more interconnected and vulnerable, the need for resilient offline payment infrastructure extends far beyond emerging markets.
Even in advanced economies, recent Microsoft Azure and AWS outages have exposed how dependent modern payment systems are on a handful of centralized cloud providers. At the same time, cyberattacks on financial infrastructure are becoming more frequent and sophisticated. A prolonged outage of a core banking network or national payment rail could paralyze economic activity.
Offline functionality, long viewed as a “developing world” problem, is now a global resilience requirement. A central bank–endorsed offline capability could ensure continuity of commerce during cyber incidents, power failures, or systemic outages. The same biometric, secure offline technology Paycode has deployed in rural Africa could safeguard digital payments in London, New York, or Frankfurt when the internet goes dark.
Lessons for Central Banks
The G+D report concludes that if central banks are hesitant to issue retail CBDCs themselves, the private sector can fill the gap using a well-regulated single-issuer framework. Paycode’s model demonstrates precisely how this can be achieved in practice:
Monetary Stability - All value in the system is fully backed by bank or central bank reserves.
Operational Independence - Local entities operate the system within their jurisdiction, ensuring data sovereignty.
Regulatory Control - Offline transactions remain auditable and redeemable at par when reconnected.
Financial Inclusion and Resilience - Offline capability ensures that both rural populations and advanced economies remain connected to the payment system, even when the network fails.
This model aligns directly with the BIS Handbook for Offline Payments and the World Bank’s guidance on prefunded fiduciary accounts at national switches.
A Call to Central Banks
At Paycode, we believe that the future of digital money must work offline. The G+D report reinforces what we have already demonstrated in the field: offline systems can operate safely within regulated financial frameworks, complementing existing payment infrastructures and strengthening national resilience.
We invite central banks, regulators, and payment system operators in both emerging and developed economies to engage with us in exploring this model further.
Offline payments are no longer a niche capability - they are the bridge between financial inclusion and systemic resilience.
From Mondex to Paycode, the journey shows that the future of money is not just digital - it’s dependable, secure, and works everywhere, even offline.
